Tax reform could hit blue states harder than red; Sanders reacts

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WASHINGTON (Gray DC) - Congressional Republicans want the federal government to stop giving tax breaks for what you pay in state and local taxes. That’s likely to hit those in blue states harder than those in red ones.

When taxes are due next April - filers will get a $60-billion break for state and local taxes paid to state and local governments. That includes property, income, and sales taxes. About one third of filers claim the deduction.

The White House wants it gone. "If you don't like what you're paying in state and local taxes go talk to your state and local governments," said Mick Mulvaney. He runs the Office of Management and Budget for the Trump Administration.

Mulvaney praises the U.S. House for voting to cut back the deduction, and Senate GOP for looking to cut it completely. He says the current break - known as SALT -- is an example of a broken system.

“Folks who live in low-tax states are actually subsidizing those high-income and property taxes in other states,” he said, “that's not fair and we're looking forward to changing as much of that as we possibly can."

Taxpayers in all brackets and in every state take advantage of the deduction. But, it largely benefits the well-to-do in high-tax states. Of the $60-billion in tax relief – about $40-billion goes to those making more than $200,000 a year.

Overall, most high-tax states - Like New York and California -- benefit more from the deduction, but lose overall, sending more cash to DC than they get back. But, highly-taxed Vermont gets the best of both worlds. The state gets more than it pays and its taxpayers benefit more than most from the SALT deductions.

“Essentially, I think people should appreciate that the folks that are pushing this tax plan are the wealthiest people and the largest corporations,” said Sen. Bernie Sanders (I-VT), “it will benefit the people on the top.”

Vermont's Department ofTtaxes does not have an official estimate of how much it would cost taxpayers. Based on national figures and without accounting for other potential changes -- eliminating the state and local tax deduction could cost Vermont filers more than $100-million. That's about $1,000 for the 100,000 filers who claimed the deduction.

“I am very concerned about that, that will impact Vermonters,” Sanders said.

Some in red districts of blue states share his concern, like Rep. Elise Stefanik of New York's North Country. In a statement, she wrote in-part, “I will be working with my colleagues in the New York delegation to improve this plan to provide real tax relief for New Yorkers and to address the issue of state and local tax deductions. "

Stefanik spokespeople did not respond to multiple interview requests.

Republican leaders want to have tax reform ready for the president to sign into law by Christmas.



 
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